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Volume 27, Issue 3

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September 12, 2013

Business continuity plans must adequately address and anticipate widespread events: SEC

The Securities and Exchange Commission’s Office of Compliance Inspections and Examinations (OCIE) has issued a Risk Alert on business continuity and disaster recovery planning for investment advisers. The alert was prompted by a review of responses to Hurricane Sandy, which caused widespread damage to Northeastern states and closed US equity and options markets for two days in October 2012.

“Our staff examined approximately 40 advisers in the aftermath of Hurricane Sandy to assess their preparedness for and reaction to the storm,” said OCIE Director Andrew Bowden. “We hope our observations in this Risk Alert and those in the earlier joint advisory will help industry participants better prepare for future events that threaten to disrupt market operations.”

The examination highlighted lack of planning for widespread events as a consistent weakness in some firms’ business continuity plans.

In addition, the Risk Alert makes observations in the following areas:

  • Planning for alternative locations
  • Preparedness of key vendors
  • Telecommunications services and technology
  • Communication plans
  • Reviewing and testing.

Read the Risk Alert (PDF).